Outsourcing drives Wipro sales 45% higher

Wipro has rounded off a week of sparkling quarterly results from Indian technology services companies in a further reflection of the robust growth of the global outsourcing industry.

The Bangalore group?s software unit, which accounts for three-quarters of consolidated revenues, boosted sales to Rs15bn ($327m) in the three months to end-September, up 45 per cent over the same period last year, and beating its own forecast.

Wipro, whose clients include telecoms player Nortel and Lehman Brothers, the US investment bank, forecast software exports would climb 18 per cent to $347m in the three months to end-December compared with the previous quarter.

Consolidated net income at Wipro, which also includes a consumer lighting division, totalled Rs3.8bn in the September quarter, up by 65 per cent over a year earlier, on revenues of Rs19.8bn, up 47 per cent, based on US accounting standards.

Sudip Banerjee, president of Wipro Technologies, the IT-services unit of Wipro, said outsourcing would ?continue [to rise] irrespective of which government emerges in Washington?.

His comments reflect concern in India that political opposition to outsourcing in the US would hold back the industry.

But those fears have so far proven overblown as businesses in the US and elsewhere - most recently Reuters, the UK-based financial data services company - have continued to announce plans to relocate business processes to India.

Wipro and its two larger rivals dominate India?s IT services sector, which industry officials say now looks likely to beat forecasts it will grow about 30 per cent this year.

?They are now benefiting from rising volumes, stable prices and improving margins,? said Ganesh Duvvuri, who tracks the technology sector at Motilal Oswal Securities in Mumbai.

Wipro also sharply enlarged its workforce in the last quarter, adding 3,282 employees to its software services unit to bring the total to 24,050.

Wipro also added 2,264 staff, mostly non engineering graduates, to its IT-enabled services units, such as Wipro-Spectramind, one of the largest call-centres in India.

The unusually aggressive recruitment programme coincided with the introduction of a new stock-based compensation package. The new scheme is partly designed to lower staff attrition, which was a high but stable 18 per cent in the last quarter.